Seats for theatrical, musical, sporting, and other events are typically sold based on a pricing system that uses broad categorizations for seat locations. For example, all orchestra seats in a theater usually are uniformly priced for a given performance. The same system applies to sporting events. All tickets for movies are priced uniformly for each showing, though discounts for certain classes of people, e.g., students and senior citizens, may be available.
This simple system disregards the fact that within each broad category some seats are more valuable than others. Moreover, setting ticket prices well in advance of a performance, and keeping ticket prices constant, often misjudges the demand and fails to optimize pricing. Not surprisingly, tickets for a given performance often sell out upon their release; for ongoing events, patrons often have to wait too long to get desired tickets. These are reliable indicators that the tickets are underpriced, i.e., that the total amount collected by the event's producer/organizer is lower than could otherwise be achieved. Alternatively, if the ticket prices are set too high, many tickets may remain unsold, also reducing the total amount collected by the event's producer, despite higher average ticket price. Because producers, as most people, prefer a bird in hand to two in the bushes, tickets are practically always underpriced. Occasionally, the sub-optimal pricing benefits the consumer; more often than not, however, it benefits the illegal re-sellers, also known as “scalpers.”
Several on-line auction methods designed to optimize revenue from ticket sales, as well as to solve other problems, have been described. One method is the subject of U.S. Pat. No. 6,023,685 issued 8 Feb. 2000 to Brett et al. (“Brett”hereinafter), hereby incorporated by reference as if fully described herein. Brett also describes several other auctioning systems and methods.
According to Brett, a central computer runs a ticket auction, receiving and evaluating bids sent by bidders from remote terminals. Although the bids are for seats in a single section with all seats subject to the same minimum bid requirement, each seat is also preassigned a preferential rank. After a predetermined bidding period, the central computer associates the seats with acceptable bids based on the bid amounts and the preferential ranks of the seats, presumably with higher bids being assigned higher ranking seats. During the bidding period, however, the bidders can cancel, raise, or lower bids at will. Brett's method also provides for ensuring contiguous grouping of seats subject to a single bid.
Brett's method has several disadvantages. First, allowing bidders to lower or even cancel their bids wreaks havoc with the auctioning process. For example, one bidder can be outbid by another, and so notified; then, the higher bidder can cancel the bid, making the first bid acceptable, despite the notification. It is not even clear at what point a bidder becomes legally obligated to pay for the tickets. In sum, allowing cancellation and lowering of the bids creates uncertainty, even chaos.
Another disadvantage is that remote auctions differ from live auctions. (By “remote auctions” I mean auctions where bidding is done online, through telephone, or by similar means.) In a remote auction, there is no reason to conduct the auction in a short period of time, with each bidder responding (or choosing not to respond) to other bidders substantially in real time; remote auctions can, and often do, last for days, even weeks. Indeed, it would be difficult to conduct a widely accessible remote auction in real time because of potential for telecommunication equipment overload caused by simultaneous attempts of multiple bidders to place or change their bids. A bidder in a remote auction would have to check the status of the bids periodically to avoid being outbid. This is an inconvenience; moreover, because most bidding will probably be done towards the conclusion of the auction, telecommunication equipment can still become overloaded, preventing the bidder from raising his bid.
Yet another problem with Brett's method is that the contiguity requirement is the same for all the bidders; i.e., the algorithm that ensures contiguous seating operates on all the bids; it does not allow each bidder, individually, to specify whether the bidder will accept scattered seats. Similarly, the algorithm does not allow each bidder to specify initially whether partially filled orders are acceptable.